Home Health & Hospice Week

FMAP increase should translate to additional $12.7 billion.

Details should soon emerge about whether the one-year, 10 percent increase to the federal medical assistance percentage (FMAP) for certain Medicaid home and community-based services will affect your bottom line.

Reminder: Section 9817 of the American Rescue Plan Act enacted in April specifies the temporary increase (see HCW by AAPC, Vol. XXX, No. 10). The Congres­sional Budget Office estimates the bump should equal about $12.7 billion, notes LeadingAge in online analysis. The HCBS increase was vague with much discretion left to states on how to use the funds, however.

Now the Centers for Medicare & Medicaid Services is spelling out the rules for the funds and setting deadlines for states to submit their initial plans in a new State Medicaid Director Letter.

HCBS benefits “provide critical services to millions of older adults and individuals with disabilities, allowing them to receive health services in their homes and communities, rather than in nursing homes and other institutions,” CMS notes in a release about the letter. “As the pandemic continues to impact health care, it is important that Medicaid benefi­ciaries with long-term services and supports needs receive the assistance required to live in the setting of their choice, including their own home.”

ARPA “helps to ensure that states can benefit from an increased federal investment in HCBS systems across the country, so that Medicaid beneficiaries receive high quality, cost-effective, person-centered services in their homes and remain a valued part of their communities,” Health and Human Services Secretary Xavier Becerra says in the release.

Important: “States must use the federal funds attrib­utable to the increased FMAP to supplement, not supplant, existing state funds expended for Medicaid HCBS in effect as of April 1, 2021,” Anne Marie Costello, CMS Acting Deputy Administrator and Director, says in the letter. “And states must use state funds equivalent to the amount of federal funds attrib­utable to the increased FMAP to implement or supplement the implementation of one or more activities to enhance, expand, or strengthen HCBS under the Medicaid program.”

In the letter, “CMS provides clarity on the way that states can demonstrate that they are using the funding in an additive manner to their HCBS systems and are not reducing state expenditures due to the increase,” offers Agencies on Aging trade group Advancing States in analysis of the guidance. For example, “to qualify for this FMAP, states must not impose stricter eligibility standards, methodologies, or procedures for HCBS programs and services than were in place on April 1, 2021,” Advancing States points out. States also must “preserve covered HCBS, including the services themselves and the amount, duration, and scope of those services, in effect as of April 1, 2021; and maintain HCBS provider payments at a rate no less than those in place as of April 1, 2021.”

The letter spells out HCBS services eligible for the increase, including home health care, personal care services, self-directed personal care services, case management, private duty nursing, the Program of All-Inclusive Care for the Elderly (PACE), and Managed Long-Term Services and Supports.

“The guidance outlines how states can go about receiving the funds, what strings are attached to these dollars, how they can be spent, and other considerations,” LeadingAge summarizes.

Good news: CMS explicitly sets out an “increase in rates for home health agencies, PACE organizations, and agencies or beneficiaries that employ direct support professionals” as an example of an allowed use of the funds. But “CMS expects that the agency, organization, beneficiary, or other individuals that receive payment under such an increased rate will increase the compensation it pays its home health workers or direct support professionals,” the letter specifies.

Other examples of allowed uses include paid sick, family and medical leave for home health and other workers; hazard, overtime and shift differential pay for workers; the purchase of personal protective equipment (PPE) and COVID testing supplies; recruitment and retention activities and bonuses for workers; and workforce training.

Timeline: Don’t let the multiple due dates in the letter confuse you. “The state must submit the initial HCBS spending plan and narrative within 30 days of the release of this guidance,” CMS says, which is by June 12. “CMS will review and approve the initial state spending plan and narrative within 30 days of a state’s submission if the submission adheres to the terms of this SMDL,” the agency says. Going forward, “states must report on a quarterly basis until funds are expended,” CMS explains.

After approval, “CMS will publicly post summary information reported by states on their initial and quarterly spending plans and narrative, including the amount of funds attributable to the FMAP increase that the state anticipates claiming or has claimed and the activities the state intends to implement and has implemented to enhance, expand, or strengthen HCBS under the state Medicaid program,” the agency explains.

States have until March 31, 2022 to “claim” their FMAP increase. But CMS reveals they have until March 31, 2024, to actually spend the funds, points out lobbying firm Thorn Run Partners in online analysis.

Do this: LeadingAge encourages providers “to work closely with their state agencies to help inform how these dollars will be used,” the trade group says.

Note: The 26-page SMDL is at www.medicaid.gov/federal-policy-guidance/downloads/smd21003.pdf.